Monday, October 15, 2007

Americans Show the Swedes How the Economy Works

Americans won the Nobel Prize for Economics today completing the Nobel Prize announcements here in Stockholm, Sweden. Of course the Economics prize isn’t one of the originals but we’re still going to give it some time today. Three Americans will share the prize. Leonid Hurwicz, Roger B. Myerson, and Eric S. Maskin. Hurwicz is 90 years old continuing this year’s trend of awarding lots of old people before they died. Apparently, the award cannot be given to anyone posthumously.

The economic work that gave these men the prize focused on mechanism design theory which utilizes game theory to explain decision making processes. Game theory is the stuff made famous by John Nash (remember the movie A Beautiful Mind?). Basically it allows you to look at the choices available and see what people, or corporations, will do in given situations. Just about everything can be turned into a game because just about everything requires a choice on some level.

This is the beauty of economics. Everyone assumes it focuses solely on numbers, supply and demand, and how capitalists can get richer. Not at all the case. Economics goes much deeper and helps explain the most mundane and common things in life, like why when there’s more than two people in my kitchen things just don’t get done at a very fast pace. Too many people, not enough space, diseconomies of scale. Economics can be applied everywhere even a tiny apartment kitchen when you’re trying to do the dishes.

Earlier in the day a report came out that a Swede might win the prize. Thelocal.se reports that Lena Edlund was the Swede who was tipped for her work regarding “the status of women.” It just wasn’t to be, in fact none of the names that were tipped in this article actually won. So it goes when there is someone who is well-deserving, like Hurwicz, but is just so old that he could die any minute. Have to squeeze that award in sometime.

For those of you who haven’t been paying attention to the Nobel Prize for Economics lately, it has been dominated by Americans. Americans have won the prize every year since 2000. In 1999 a Canadian won. America’s little brother. Americans may be said to be lagging in the sciences (despite having a Nobel Prize winner in Medicine) but in the social sciences it seems they are pulling away. And so, I ask you to join me in a quick USA! USA! USA! chant today as you go about making decisions and purchases in your local economy.

The US definitely does good work but it is still realy surprising to me that there has been such a continuous stretch of Nobel winners from the US. You would think that eventually the committee would get tired of giving it to Americans.

Yeah it does sound that this work should have been honored a while ago. Apparently there has just been a lot of good economic work coming out of the US lately. It will be interesting to see who breaks the streak though!